Gujarat High Court
Hotel Mardias Pvt. Ltd. vs Union Of India And Ors. on 19 December, 1995
Equivalent citations: [1996]220ITR94(GUJ)
Author: S.K. Keshote
Bench: S.K. Keshote
JUDGMENT Rajesh Balia, J.
1. Heard learned counsel for the parties. On 13th Aug., 1994 an order under s. 269UD (was passed) for purchase of property in question which was the subject matter of an agreement to sale between the petitioner and the vendors. The purchase price was fixed to be Rs. 52 lakhs. The entire purchase money was paid by the transferor to the transferees. Under the order itself it was directed by the Appropriate Authority to keep the aforesaid amount payable by Central Government in personal deposit account of Appropriate Authority until leasehold rights.
2. The aforesaid order is under challenge in this petition on two grounds. Firstly the order by the Appropriate Authority neither records a finding about the fair market value of the property sought to be purchased as on the date of agreement to sell without which no determination about undervaluation of consideration stated in the agreement could have been made, nor the order records a finding that the apparent consideration has been undervalued with a view to avoid tax. The satisfaction about the two facts are conditions precedent before power under s. 269UD could be exercised. Secondly it has been urged that even if the order of purchase is otherwise valid it stands abrogated under s. 269UH inasmuch as the purchase price has not been tendered to the person entitled to receive within one month from the end of month in which the property became vested in the Central Government on making of the order under s. 269UD(1) by the Appropriate Authority. The order directing deposit of the amount with the Appropriate Authority on the face of it is contrary to the provisions of s. 269UG and the same cannot be said to be a ground for saving the money (many) consequences of non-payment provided in s. 269UH.
3. Having perused the order and record placed before us, and considering the submissions made before us, we are of the opinion that both the contentions merit acceptance.
4. Since the decision of Supreme Court in C. B. Gautam vs. Union of India & Ors. (1993) 199 ITR 530 (SC), it is settled that before an Appropriate Authority makes an order for purchase of the property which is the subject-matter of an agreement to sell, under s. 269UD, it must reach a satisfaction about undervaluation of apparent consideration stated in the agreement and that such understatement has been made with a view to evade the tax. The Appropriate Authority is enjoined with an obligation to make a speaking order under s. 269UD(1) specifying the grounds on which the purchase order is made. This inheres that the order on the face of it must disclose about the satisfaction on the two aspects reached by the Appropriate Authority and reasons thereof. This Court has also expressed the same opinion in the case of Barwarben Tomas Khambata & Ors. vs. Appropriate Authority 1995(2) GLH 636.
5. The order under challenge nowhere records the satisfaction of the Appropriate Authority about understatement having been made with a view to evade the tax. The order, therefore, suffers from error apparent on the face of record and cannot be sustained.
6. Assuming that the order under s. 269UD(1) has been made in accordance with law under s. 269UG it is required that the amount of consideration payable to the person entitled to such consideration within a period of one month from the end of the month in which immovable property concerned becomes vested in the Central Government under s. 269UE. It further provides that from the consideration so paid up, the amount of any liability for a tax or any other sum remaining payable under the IT Act, WT Act, GT Act, ED Act, Companies (Profits) Surtax Act, by such person than the Appropriate Authority may in lieu of the payment of consideration set off such outstanding liability. Such adjustment is equivalent to payment to person entitled to consideration inasmuch as it results in discharge of his liability. It also envisages what are the contingencies when the amount of consideration instead of being paid or tendered to the person entitled, may be deposited by the Central Government, with the Appropriate Authority. These contingencies are - (1) where any dispute arises as to the apportionment of amount of consideration amongst the persons to be entitled thereto : (2) where the person entitled to the amount of consideration does not consent to receive it or if there is dispute as to the title to receive the amount of consideration. Such deposit is in fact postponement of payment to a future date. The two eventualities (i) adjustment against existing liability and (ii) deposit with Appropriate Authority for payment at some future date are quite different. The provisions of s. 269UG as to payment within time stipulated therein or deposit of money in contingencies stipulated in sub-ss. (2) and (3) of s. 269UG are mandatory in character. This is obvious from the consequence of failure to pay or tender the consideration in time or deposit the same in circumstances mentioned under s. 269UG provided under s. 269UH. The consequence of failure is abrogation of order of purchase made under s. 269UD and reverting of the property in transferor on expiry of period stated under s. 269UG without fulfilment of its requirement.
7. From the impugned order in question and reply submitted on behalf of the respondents we find none of the contingencies existed in which amount can be deposited with the Appropriate Authority nor it is a case where any adjustment of outstanding tax liability was to be made. Dispute as to apportionment of amount envisages rival titles laying claim to the consideration before the Appropriate Authority. It is nobody's case that anybody else than the transferor, who had paid full consideration under agreement to sell, had laid claim to consideration fixed by the Appropriate Authority. It is also not the case of the respondents that the petitioner ever refused to accept the amount when tendered to it. It cannot be said to be a case where any dispute about title to the amount received existed inasmuch as there is a clear finding in the order of Appropriate Authority that the entire amount of consideration has been paid by the transferee, that is to say that any amount which is payable under order under s. 269UD, it was to be paid to the transferor. When none of the conditions, on the existence of which Central Government could have deposited the sum of consideration with the Appropriate Authority, exist, it must be held that deposit of amount with the Appropriate Authority did not amount to tendering to person entitled to such consideration. Obviously, under the scheme of s. 269UG tendering of amount to the person entitled to such consideration and deposit of the amount with the Appropriate Authority are two different obligations and one is not substitute of another. The only ground appearing from the order of the Appropriate Authority which appears to have weighed with it to direct the deposit of amount instead of tendering it to the petitioner was to secure vacant possession of the property in question from one Mr. Modi or his assign who according to the petitioner was a tenant, but according to the Appropriate Authority was a person who has been put in occupation of the property for the purpose of defeating the provisions of Chapter XX-C, that is to say, that for creating evidence for a lesser amount of fair market value of the property by showing it to be in possession of a tenant and not in occupation of the ownership.
8. The recovery of possession of the property has not been made a ground under the statute itself for withholding payment. On the contrary under s. 269UE, the Appropriate Authority or any person duly authorised by the Appropriate Authority are empowered to take vacant possession of the property either on surrender by the occupants or by use of such force as may be necessary. For that purpose under s. 269UE(4) the Appropriate Authority is empowered to requisition services of police officer for taking possession and on such requisition the police officer is duty bound to comply with such requisition. If in this process any person in possession takes recourse to legal proceedings to protect his rights claimed by him and the authority is restrained from taking possession of it, it cannot affect the obligation of the Central Government to tender the amount of consideration to the person entitled to and does not permit the Central Government under s. 269UD to deposit the amount with the Appropriate Authority. In this connection it is further to be noticed that under the scheme of the Act, the vesting of the property does not wait until taking of possession by the Appropriate Authority. After vesting of property takes place the taking over of possession is left to act of voluntary surrender by the occupant or on use of such force as is necessary by the Appropriate Authority to secure vacant possession.
9. Once we have come to the conclusion that amount of consideration was not tendered within the time prescribed under s. 269UD and there was no ground for making deposit to Appropriate Authority the consequence which has been provided under s. 269UH would necessarily follow, namely, the order of purchase shall stand abrogated and the immovable property shall stand reverted to the transferor on the expiry of the period in which amount was to be tendered but has not been so tendered.
10. For the reasons aforesaid this petition succeeds. The impugned order dt. 13th Aug., 1994 is quashed. As a consequence of which the property shall stand reverted to the owner of the property. As consequence necessary no objection certificate about execution of sale deed between the transferor and the transferee shall be issued by the Appropriate Authority within a period of four weeks from the date of producing this order before it.